What is a borrowing-base certificate and when must it be submitted?
Last updated: August 27, 2026
What does a borrowing-base certificate include?
The BBC is a standardized form (often an Excel template provided by the lender) that includes:
- Total AR: Gross accounts receivable from the borrower's AR aging report.
- Ineligible AR deductions: Cross-aged invoices, contra/affiliate AR, foreign AR, unbilled AR, progress billings, retention, and other ineligible categories per the Eligible Receivable definition.
- Eligible AR: Total AR minus ineligible deductions.
- AR advance rate: Percentage applied to eligible AR.
- AR borrowing base: Eligible AR × advance rate.
- Inventory (if applicable): Eligible inventory multiplied by inventory advance rate.
- Total borrowing base: Sum of AR and inventory borrowing base components.
- Reserves: Dilution reserve, concentration reserve, and other reserves specified in the credit agreement.
- Availability: Total borrowing base minus reserves minus outstanding revolver balance.
When must the BBC be submitted?
The credit agreement specifies the BBC submission deadline. Bank of America Business Capital states that "you will typically need to provide monthly reports updating the status of your borrowing base." The OCC Comptroller's Handbook on Asset-Based Lending notes that borrowing base certificates are submitted "weekly or monthly." Late submission may trigger default provisions, allow the lender to reduce availability, or require payment of late fees.
What happens if the BBC is inaccurate?
The borrower certifies that the BBC is accurate and complete. If the lender discovers inaccuracies during a field exam (e.g., ineligible AR incorrectly included as eligible), the lender may:
- Require immediate paydown: If the error caused the borrower to overdraw availability, the lender may demand immediate repayment of the excess.
- Increase reserves: The lender may impose additional reserves to account for reporting inaccuracies.
- Trigger default provisions: Material misrepresentation in the BBC may constitute an event of default under the credit agreement.
Related topics
- Before binding an ABL revolver, which AR lines are ineligible?
- Field exam vs monthly borrowing-base reporting
- Dilution reserve vs ineligible
- Work-in-process schedule borrowing-base certificate
Frequently asked questions
What is a borrowing-base certificate and when must it be submitted?
A borrowing-base certificate (BBC) is a monthly report the borrower submits to the ABL lender listing eligible accounts receivable, inventory, and other collateral, along with reserves and ineligible exclusions. The BBC calculates availability by multiplying eligible collateral by advance rates and subtracting reserves. Bank of America Business Capital states that "you will typically need to provide monthly reports updating the status of your borrowing base." Late or inaccurate BBC submissions may trigger default provisions or reduce availability.